"End of LG-SK Battery Dispute... Spotlight on Secondary Battery Material and Equipment Companies"

[Asia Economy Reporter Hyungsoo Park] LG Energy Solution and SK Innovation, which have been engaged in a battery trade secret infringement dispute, have successfully reached a dramatic agreement. The two companies, having ended the dispute, are expected to expand capacity to secure competitive advantages.

NH Investment & Securities announced on the 11th that SK Innovation agreed to pay 2 trillion KRW to LG Energy Solution, thereby settling all technical disputes including ITC and patent infringement lawsuits.

Hwang Yoosik, a researcher at NH Investment & Securities, explained, "The agreement was made by paying 1 trillion KRW in cash and 1 trillion KRW in royalties from product sales," adding, "The 2 trillion KRW is a midpoint between the amounts proposed by LG and SK."

He continued, "SK Innovation and LG Energy Solution can continue their business in the United States," adding, "from SK Innovation's perspective, this is an agreement at a manageable level."

Furthermore, he emphasized, "In the short term, credit ratings, financial, and business risks can be seen as reduced," and "the end of the patent lawsuit removes a major obstacle to SKIET's initial public offering (IPO)."

Researcher Hwang analyzed, "By securing about 1 trillion KRW through the sale of existing shares, it can be used for the settlement payment," and "since royalties are not a short-term financial pressure, the possibility of rating downgrades by global credit rating agencies such as S&P and Moody's is low due to the confirmed settlement amount."

He emphasized, "There must be a specific funding plan for the increasing secondary battery investments going forward," and "LG Energy Solution has no significant changes in its ongoing business and investments, and has secured a foundation to smoothly proceed with the upcoming IPO."

Researcher Hwang expected that the battery value chains of LG Energy Solution and SK Innovation will strengthen their U.S. business strategies. He explained, "Material suppliers will actively establish local factories in the U.S. to secure business competitive advantages," and "both SK Innovation and LG Energy Solution plan to significantly increase production capacity in the U.S."

Ecopro BM (cathode materials), SKC (copper foil), and SFA (equipment) should be noted, according to Researcher Hwang. He said, "Ecopro BM has high exposure to SK's business, so it requires priority attention," adding, "this year, it plans to supply about 1,000 tons of cathode materials to SK's Georgia plant in the U.S."

Additionally, "SFA has high momentum for U.S. orders as it supplies equipment to SK," he emphasized, "and it was confirmed from China bidding that equipment was supplied to SK's plant in China."